U.S. District Court tosses case challenging health law tax credits

The U.S. District Court for the District of Columbia on Wednesday dismissed one of the last major legal challenges to the Affordable Care Act.

The case, Halbig vs. Sebelius, argued that the health law only allows the federal government to provide premium tax credits - the subsidies that help low- and moderate-income people purchase health coverage - in states that use the federally run marketplace.

That's because a section of the ACA says the tax credits can only be applied to coverage purchased "through an exchange established by the state."

The lead plaintiff in the case is Jacqueline Halbig, a former policy adviser to the U.S. Department of Health and Human Services under President George W. Bush.

Conservative scholars Jonathan Adler and Michael Cannon, who first touted the supposed loophole in the law, have said it was intentionally written that way in order to coerce states into running their own marketplaces.

The federal government argued the language was merely a drafting error, which could easily be fixed if not for the polarized state of Congress, which has made it nearly impossible to make any legislative fixes to the law.

The government maintained that other aspects of the law makes clear Congress intended to provide the tax credits in all states.

In the court's decision to dismiss, U.S. District Judge Paul L. Friedman agreed, writing:

"In sum, the Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges. What little relevant legislative history exists further supports this conclusion and certainly – despite plaintiffs’ best efforts to suggest otherwise – it does not undermine it. The Court therefore concludes that “Congress has directly spoken to the precise question” of whether an “Exchange,” includes federally-facilitated Exchanges. And that must be “the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”

Ron Pollack, executive director of Families USA, a liberal patient advocacy group that filed an amicus brief in the case, said Wednesday that he was thrilled by the court's decision.

He said the case was "probably the most significant existential threat to the Affordable Care Act."

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